ILA, USMX agree to meet as strike deadline looms

Wednesday, December 26, 2012

The U.S. Federal Mediation and Conciliation Service (FMCS) director said the International Longshoremen's Association and the group trying to negotiate a new contract with them, the U.S. Maritime Alliance, have agreed to meet before their current pact expires on Dec. 29.
“FMCS Director George Cohen has called a meeting of the ILA and the Maritime Alliance in advance of the December 29th expiration of the contract extension. The parties have agreed to attend. Due to the sensitive nature of the negotiations FMCS will have no additional comment at this time," was the brief statement released late Monday.
The master contract covering container shipping operations between the longshoremen working at 14 ports along the East and Gulf coasts expired on Sept. 30, but was extended 90 days until Saturday. The ILA has said if an agreement is not reached, its members could go on strike Sunday.
Earlier Monday, two of the largest container terminals in the Port of New York and New Jersey - Maher Terminals and Port Newark Container Terminal - urged customers to pick up cargo by the close of Friday, Dec. 28, saying if there was a work stoppage, there would be no gate activity at their terminals.
Also on Monday, Joe Curto, president of the New York Shipping Association (NYSA), the group that represents employers in the New York area, expressed its support for USMX, which is negotiating the master contract for container operations at all 14 ports.
Curto said NYSA "is disappointed in the breakdown of negotiations" with the ILA, and the "inflexibility of the union to resolve our disagreements."
"As has been previously reported in the press, the major issue dividing the United States Maritime Alliance (USMX) and the ILA is container royalty; a supplemental payment the longshore workforce has enjoyed over nearly half a century. Although the continuance of the container royalty program in its present arrangement is a major issue for the employers, the issues of importance specific to the Port of New York and New Jersey have yet to be addressed. These issues include low productivity, excessive staffing, and archaic work rules," he added.
"NYSA continues to support the efforts of USMX in reaching an agreement on master contract issues and remains anxious and ready to address the issues that are important to the viability and sustainability of the Port of New York and New Jersey," Curto said.
On Friday, USMX issued a statement saying "a shutdown would wreak havoc on manufacturers, retailers, farmers and others who depend on the ports to move their supplies and products. They include large America’s retailers like Wal-Mart, Target and Home Depot that rank among the country’s top importers as well top exporters like Weyerhaeuser, DuPont and Cargill.
"Not only would any disruption have serious consequences for the nation’s still-recovering economy, but it would also jeopardize the financial well-being of the ILA’s 14,500 members, who would lose nearly $5 million in wages and benefits for each day they’re out of work or a total of $150 million in lost compensation in just a month," USMX warned. "At the Port of New York and New Jersey, which employs more ILA members than any of the 13 other East and Gulf Coast ports, the union’s 3,250 members would lose $7.5 million a week in wages alone."
Meanwhile, carriers are telling customers about plans they may implement in the event of a strike.
"Our plans may include port omissions, vessel idling, and rotation changes intended to minimize the impact of any work stoppage and to prepare for the recovery of operations once such unrest ends," said MOL, for example.
MOL said "We will provide specific vessel details as they are developed. In the interim, please be guided as follows:

Import customers should retrieve containers that are on terminal as soon as possible.

Until further notice, no refrigerated containers will be accepted for vessels sailing after Dec. 29.

For most terminals, cargo that's already in demurrage will remain in demurrage for the duration of any potential work stoppage.

Rail carriers will embargo freight moving over East Coast ports if work stoppage commences.

Reefer shipments that remain at the terminal, if a work stoppage occurs, will have to be monitored at the customer’s expense.

MOL also noted that various terminals will have late gates at some ports.
Some carriers have sent reminders to customers of possible port congestion surcharges in the event of labor problems at ports, even at ports where ILA members don't work. Many carriers announced the possibility of surcharges earlier this year.
MSC, for example, in a notice, "Port Congestion Surcharges Asia to USA West Coast and East Coast," reminded customers that a port congestion surcharge of $800 per 20-foot container, $1,000 per 40-foot container, and $1,125 for high cube containers will be applied to all import cargo discharged at any U.S. port on or after Dec. 29 .
"In the event of no port congestion, this tariff filing will be nullified," MSC said. "The surcharge will be assessed for the entire period of a congestion at any U.S. port resulting from labor unrest, whether a strike, lock-out, work stoppage, slow down, or the like, to cover the additional expenses caused by operational delays. It is important to note that the port congestion surcharge may apply even after an eventual labor dispute has been resolved, as a result of the after effect of congestion."
Back in September the the U.S. Federal Maritime Commission said it had received numerous inquiries about congestion surcharges, noting that unless done pursuant to a waiver or exemption, any tariff rule (including surcharges) of a common carrier that results in an increased cost to a shipper may not be effective earlier than 30 days after publication. - Chris Dupin